Borrowing from a credit union

Credit unions are community savings and loan cooperatives, where members pool their savings to lend to one another and help to run the credit union. A cooperative is an organisation which is owned by and run for the benefit of the members who use its services. Interest rates can vary up to a legal maximum of 3% per month (42.6% APR). In Northern Ireland the cap is 1% per month (12.9% APR). All credit unions offer savings and loan accounts while some (usually larger credit unions) may also offer additional products and services.

What are credit unions?

Did you know?

Worldwide there are over 40,000 credit unions in 80 countries around the world. In Ireland, over 70% of the population belongs to a credit union.

Source: Association of British Credit Unions

Credit unions are community organisations run by and for their members.

There are several key features of a credit union:

People who save or borrow through one must have a common bond. That means they might live in the same area, work for the same employer or have the same profession. They can also be members of the same church or trade union.

They are run on a ‘not for profit’ basis. Instead of paying a profit to shareholders, they use money they make to reward their members and improve their services.

They can be large or small; some have thousands of members while others are much smaller.

They are regulated by the Prudential Regulatory Authority and the Financial Conduct Authority. The FSCS savings protection limit for consumers is £85,000. If you have more money than the limit, some of your money will be at risk if your bank, building society or credit union fails.

Why go to a credit union?

Credit unions operate with three main aims:

To provide loans at low rates

To encourage all members to save regularly

To help members in need of financial advice and assistance

Credit unions act in the interests of all members and so try to ensure they don’t let their members take out loans they cannot pay back by assessing their income and, in some cases, how much they’ve been able to save.

There’s also a cap on the amount of interest they can charge on their loans of 3% a month or 42.6% a year APR. The cap in Northern Ireland is 1% a month.